Donors And Funders Are Also Consumers

May 9, 2012       Thomas McLaughlin      

Two questions, the first one a multi-part: Who owns Benjamin Moore & Co., Fruit of the Loom, Geico and See’s Candies? (Answers below)

Second question: Who cares? Other than being a good head start on winning a Geek of the Week contest, what value does this information offer?

The answer is — not much. This is little more than interesting trivia that is highly unlikely to change your behavior. If you like browsing in a Pottery Barn store, that won’t change. In fact, there is a good chance that you’ll forget details like this because they have little utility.

These simple examples of brand management offer a useful starting point for some guidelines about managing your brand identity. Nonprofit managers and/or boards are often more comfortable with the concept of identity than with the idea of a brand, believing that the latter word has disconcerting commercial connotations. For these purposes the difference is minimal.

Some of the strongest brands in the United States belong to nonprofits. Brand management experts have measured the worth of some of those brands to be in the billions of dollars. How did they get that way? They got there by following these simple principles.

Let Your Brand Manage Risk

It helps to see brands as risk management tools for consumers. Usually it’s not risk in the sense of bodily harm or death, although this is a consideration when choosing medical providers. Rather, it is the “risk” of not getting what one wants.

Hungry motorists in strange towns pick the familiar logo of a fast food restaurant because they’re not sure what they will get if they stop at Paul’s Diner. Locals, on the other hand, might pick Paul’s Diner because they know exactly what they will get, having experienced it before. Each group is practicing brand-based risk management.

The risk factor for nonprofits is greater than one might imagine. Government funders loathe making a bad pick because of the possible political repercussion. Foundation managers can feel pressured to make grants to responsible organizations, which is one of the reasons why the recipient pool tends to change slowly. Recipients with good track records greatly reduce the uncertainty of wasting precious foundation funds on a bad choice.

Service recipients practice risk management with a different twist. When given total choice among nonprofit service providers they are likely to behave the same way as retail consumers. But, their choices are often constricted by government or third-party funding. In this case, the trade-off might be reduced loyalty and an easily severed bond. To offset this, the nonprofit has to find ways to retain their loyalty should the external funding disappear.

Some states are well into voucher funding for certain services typically provided by nonprofits. This comes close to replicating the conditions of an open market, so the nonprofit must cement loyalty through service quality and ease of use.

Make Brand Decisions Invisible to Consumers. Here is a truism of brand management: Most important brand decisions are made out of sight of the consumer. A brand identity is like a stage performance. There are probably more people backstage than can be seen on stage at any one time, but a well-done production will keep one riveted to the stage where the visible action occurs.

The implication of this principle is that an organization has to work hard to keep in mind that the consumer sees the brand differently. It is easy to believe that their perception of the brand from the inside is the one the consumer sees when in fact they are only seeing the brand from “back stage.” As a result, they tend to make decisions about a brand based on their personal experience with it, not on the consumer’s perceptions.

This natural tendency to make “inside” decisions about brands can skew certain results. For example, one nonprofit with which we are familiar merged in two different organizations on separate occasions. In each case they simply replaced the existing organizations’ names with their own. Within a short period of time, both of the organizations had lost most of their donors. While the total amount raised by the donors was not large, it was enough to put the programs permanently in a deficit position.

To manage a brand appropriately, the streetsmart manager will find ways to get outside and see the full picture of the brand’s meaning to consumers. This is the reason why consumer satisfaction surveys and similar tools are so important in brand management. It is also why organizations that look at their brands only from the inside are likely to miss most of the meaning they have for consumers, including funders.

Make Your Brands Stand Alone. A corollary to the out-of-sight principle is that brands must be able to stand-alone and be functionally self-contained. The consumer’s or funder’s experience should require no additional assistance. This means that a good brand does not need support from another brand. Brands that are not clearly delineated from each other might confuse the consumer.

It can be hard and expensive to manage multiple brands in the same organization. This central fact is one of the things driving the formation of multi-corporate organizations. Brands can fit neatly into the bounds of a corporate structure. This is one of the characteristics that lead to multiple corporations being created with governance ties to each other.

Although there is no reason why a single nonprofit corporate structure couldn’t house multiple brands, the elegance of a one-brand-one-corporation model can be compelling.

Make the Brand Experience Replicable. Brands reduce consumer risk by providing a replicable experience. In turn this means that strong brands must have strong systems behind them. Just like their for-profit counterpart, the nonprofit consumer (as well as funders and donors) is seeking a reliable experience with a desirable outcome.

This is perhaps the most difficult part of brand management because good systems are often extremely difficult to create and maintain, especially for small to medium sized nonprofits. This is why some brands may seem to be more of a name on the door than an indicator of reliability. The true brand experience is replicable.

Treat Your Brand Like an Asset. A good brand is literally an asset. In the for-profit field, assets are regularly bought and sold. The Abercrombie and Fitch brand, which people in their teens and twenties recognize instantly, used to be a much different brand for their grandparents. Years after that original A & F line went out of business, the name was purchased by a new company for use by the chain of stores that are now ubiquitous in the nation’s malls.

The chief applicability of this principle to nonprofits is that a good brand represents enduring value and should not be treated lightly. The three or four dozen of the best-known nonprofit brand names know this intuitively. These organizations, often referred to as federations, resemble for-profit franchises in many ways. The national office of nonprofit federations is usually responsible for the care and protection of the brand name just as in for-profit franchises, and they charge a franchise fee as well, except that it goes by a different name – member dues.

Streetsmart nonprofit managers should treat their brand names like the assets they are. They may not be bought and sold, but they manage consumer demand and are a critical part of a nonprofit’s effectiveness.

Answers To Questions Above: They are all owned by Warren Buffett via Berkshire Hathaway.

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Thomas A. McLaughlin is the founder of the consulting firm McLaughlin & Associates and a faculty member at the Heller School for Social Policy and Management at Brandeis University. He is the author of Nonprofit Mergers and Alliances (2nd edition), published by Wiley & Sons. His email address is tamclaughlin@comcast.net